We're leaving the bear market in the dust... The bottom happened nine months ago. Stocks have surged higher since then... And we're darn close to new all-time highs.
Editor's note: Investors are starting to feel optimistic...
The market has been rallying all spring and into the summer. Now, investors are starting to believe the good times may just keep on going. And they may be right... This may turn out to be a great time to put your money to work.
Today, we're sharing a recent essay from Brett Eversole, editor of Daily Wealth, published by our friends at Stansberry Research. In this piece, originally published July 11, Brett argues now is not the time to be a contrarian.
As Brett shows us... times like these have been great investing opportunities in the past...
'Mom and Pop' Are Excited About Stocks Again
By Brett Eversole
We're leaving the bear market in the dust...
The bottom happened nine months ago. Stocks have surged higher since then... And we're darn close to new all-time highs.
Few would have thought it was possible at the start of the year. Investors wanted nothing to do with stocks. Now, with prices moving higher, folks are getting excited again...
Mom-and-pop investors are now the most optimistic they've been since before the bear market. And one bullish reading just hit a new 52-week high as a result.
That might look like a typical warning signal to contrarians like us. But as we'll see, this surge doesn't doom the market. In fact, sentiment can get a lot crazier before we need to start worrying.
Let me explain...
It has been a heck of a rally. Stocks are up more than 10% in four months. And now, the average investor is finally starting to notice.
We can see it by looking at the American Association of Individual Investors ("AAII") survey. This is a simple yet effective tool for getting a handle on how folks feel about the market...
This weekly poll asks individual investors whether they're bullish, bearish, or neutral on the stock market for the next six months. And it has been collecting that data for more than 30 years.
That long history means we can see how sentiment changes throughout market cycles. And with stocks moving higher, folks are getting more bullish today.
Specifically, the bullish reading from the AAII survey hit a 52-week high last month. You can see it in the chart below...
Marc Chaikin helped build Wall Street and Dr. David Eifrig is a former vice president at Goldman Sachs. With over 90 years of combined investing experience, they both agree: AI is a double-edged sword that could either make or break your wealth... but most people don't know the real story! Get ready, because on July 19, they will cut through the hype and answer all your burning questions about what AI could mean for you and your money in 2023. Click here for this important update.
While the stock market hums along, a much bigger (and more important) market is flashing a huge warning. One that will definitely affect stocks... housing... and the entire economy. Ignoring this signal would be a big mistake. But billionaires (and some of the world's best analysts) LOVE this kind of turmoil. Because it's a chance to buy world-class investments for pennies on the dollar. The same setup led to 772% gains in 2009. Get the full story here.
This spike in sentiment stems from the massive rally we've seen in stocks. Only about 19% of folks said they were bullish in mid-March. That figure has jumped to more than 45% in recent weeks.
The biggest gains usually happen in hated assets... So you might assume this change would be bad for stocks going forward. But history shows that's not the case.
To see it, I looked at each new 52-week high in the bullish rating. Here's what stocks did after similar setups in the past...
The S&P 500 Index has increased 7.7% per year since 1990. We'd typically expect worse performance after folks get bullish. But not this time.
After the AAII bullish reading hit a new 52-week high, returns increased to 5.9% in six months and 9.7% gains in a year. That's not massive outperformance. But it proves a larger point...
"Mom and pop" have started paying attention to the boom in stocks. At the same time, we're still a long way from the kind of excitement we'd expect at a market top.
Just take another look at the AAII chart to see it. This measure surged all the way to 57% in April 2021 – a few months before the market peaked. And it stayed above 40% for much of the year.
In other words, it isn't time yet to bet against stocks. Sentiment still has plenty of room to run. So despite the ramp-up in optimism, we want to stay bullish today.
Good investing,
Brett Eversole Editor's note: It's no secret that one of the most significant contributors to the S&P 500's recent rally has been the rise of generative artificial intelligence ("AI").
That's why our founder Marc Chaikin will take the stage next Wednesday, July 19, for a frank discussion on whether AI is just another stock market bubble... or a major investable opportunity right now. Plus, he reveals which specific stocks you should target (or avoid).
I urge you to tune in – I know I will – and consider what he has to say very carefully. Click here to save your spot.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.08%
11
16
3
S&P 500
+0.79%
193
239
66
Nasdaq
+1.70%
62
33
4
Small Caps
+0.81%
608
906
349
Bonds
+1.05%
Communication Services
+1.47%
12
6
2
— According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+5.73%
Materials
+3.99%
Communication
+3.84%
Discretionary
+3.14%
Industrials
+2.80%
Financial
+2.77%
Information Technology
+2.49%
Real Estate
+2.16%
Utilities
+1.88%
Staples
-0.54%
Health Care
-0.57%
* * * *
Industry Focus
Semiconductor Services
24
13
1
Over the past 6 months, the Semiconductor subsector (XSD) has outperformed the S&P 500 by +11.05%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #5 of 21 subsectors and has moved up 1 slot over the past week.
Top Stocks
DIOD
Diodes Incorporated
QCOM
QUALCOMM Incorporate
ON
ON Semiconductor Cor
* * * *
Top Movers
Gainers
EPAM
+4.80%
NVDA
+4.73%
GOOGL
+4.72%
MGM
+4.10%
QCOM
+3.74%
Losers
PGR
-13.12%
LUV
-3.92%
FAST
-3.46%
ALK
-2.95%
GPC
-2.93%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
BLK, C, JPM, PGR, STT, UNH, WFC
No earnings reporting today.
Earnings Surprises
PGR The Progressive Corporation
Q2
$0.66
Missed by $-0.69
DAL Delta Air Lines, Inc.
Q2
$2.68
Beat by $0.29
PEP PepsiCo, Inc.
Q2
$1.50
Beat by $0.11
CAG Conagra Brands, Inc.
Q4
$0.62
Beat by $0.03
CTAS Cintas Corporation
Q4
$3.33
Beat by $0.14
* * * *
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